Venture capital firm Sequoia Capital has clarified that its investment in FTX is worthless as it has been reduced to zero, according to a Nov. 10 memo sent to its limited partners.
Here is a note I sent to GGFIII’s LP regarding FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022
Sequoia continued that its exposure to FTX is limited. His $150 million investment in Global Growth Fund III is less than 3% of the fund, according to a major investment firm. Separately, losses were offset by $7.5 billion in gains from the fund.
Additionally, $63.5 million invested in FTX and FTX US through the Sequoia Capital Global Equity Fund represents less than 1% of the Fund’s portfolio.
Sequoia invested in FTX in 2021, the exchange has raised $900 million at a $32 billion valuation. The VC firm claimed to have performed due diligence on the exchange before investing. At the time, FTX had about $1 billion in revenue.
“We are in the business of taking risks. Some investments will unexpectedly rise and some will unexpectedly fall.”
The decision to mark the investment down to zero comes after Binance refused to acquire the struggling company, citing poor money management and regulatory scrutiny.
Meanwhile, reports have revealed that Canada’s third largest pension fund, the Ontario Teachers’ Pension Plan, was exposed to struggling companies.
Sequoia is one of the most prominent venture capital firms in the cryptocurrency space. The company has dedicated industry-focused funds and invests in several crypto companies, including Fireblocks, Magic Eden, and Filecoin.